SINGAPORE (Commodity Online): Singapore Mercantile Exchange, a leading Asian multi-product commodity derivatives exchange, has announced that it will commence trading of the West Texas Intermediate (WTI) light sweet crude oil futures contract on its state-of-the-art electronic trading platform when it goes live in August this year.
SMX will be among the first exchanges to list the global benchmark in oil pricing at the time of its launch. This is in line with the exchange's endeavour to be the premier Asian commodity derivatives exchange for trading key energy derivatives, according to an SMX press release.
WTI, also known as Texas Light Sweet, is used as a benchmark in oil pricing. An average of 600,000 futures contracts on WTI are traded per day around the world accounting to about 600 million barrels of oil. WTI will enable SMX to offer its participants the opportunity to trade one of the world's most liquid energy products in an electronic marketplace.
Speaking on this development, Thomas J. McMahon, Chief Executive Officer of SMX, said, We see this as the first step towards establishing a broad base and multiple product facility for energy hedging, trading and investing from Singapore. The addition of a globally recognized benchmark to the existing suite of products to be launched on SMX is complementary to our product strategy of establishing correlation and basis valuation for the Asian suite. Our complete energy complex will allow for hedging and investment across the entire energy product supply chain.
We look forward to trading WTI Crude Oil Futures, an influential benchmark for international oil pricing in Asian time zone on SMX as it would empower market participants with efficient price discovery and enhanced risk management in energy derivatives, said Framroze Pochara, Executive Director at SMX.
The US Dollar cash settlement futures contract on SMX will be traded in units of 1,000 barrels per unit. Contracts can be traded for any current month and the 11 consecutive months. The price of each contract, or Contract Price, is based on quoted prices for one barrel, with Final Settlement Price in line with the settlement price of WTI futures for a maturing month on the Last Trading Day. Last Trading Day for WTI contracts on the SMX platform will be the third US business day prior to the 25th calendar day of the month immediately before the contract month.